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Always keep track of stock splits.
While splits don’t change the value of a stock, they can serve as a positive signal. This can then lead to further liquidity and more investor interest. After all, if an attractive $500 stock were to split 10:1, more investors are likely to jump in.
Plus, according to Morningstar.com, “Splits matter – because these stocks outperform after the announcement, by a lot. Average returns one year later are 25% vs. 12% for the S&P 500 SPX as a whole, say researchers at Bank of America. It’s worth brushing up on stock splits now, for two reasons. Stock splits are picking up again after a decade-long lull.”
That being said, here are just a few stock splits to buy into today.
O’Reilly Automotive
Just a few months ago, O’Reilly Automotive (SYM: ORLY) split 15 for 1.
“This split will make our common stock more accessible to our team members, enabling them to acquire whole shares, rather than fractions, more readily through our stock purchase program, which allows them to purchase stock conveniently through payroll deductions at a 15% discount.”
“We feel this is the right time to split the stock and further include our team members in the next chapter of growth for Team O’Reilly,” says CEO Brad Beckham.
Since that split on June 10, ORLY ran from about $90 to $106.12.
Interactive Brokers
Interactive Brokers (SYM: IBKR) split 4 for 1 on June 16.
Since then, IBKR ran from about $52 to $62.11.
At the time, the split was supported by strong earnings growth at the time. Even now, IBKR is still fundamentally strong, having just posted EPS of 51 cents, which beat by four cents. Revenue of $1.48 billion, up 20.3% year over year, beat by $80 million.
In addition, as noted by Seeking Alpha, “The company added 250,000 net new accounts in the quarter, bringing the year-to-date total over 528,000, exceeding the total added in all of 2023. Client credit balances reached a record $144 billion, and client equity rose 34% to $664 billion.”
Fastenal Company
Shares of Fastenal (SYM: FAST) split 2 for 1 on May 22.
Since then, the stock ran from about $40 to $46.81. That split was supported by another round of strong earnings and still is. In fact, analysts at Baird just upgraded FAST to outperform thanks to the new strategy and the potential for accelerating earnings.
“We believe the Street underestimates Fastenal’s earnings power,” said the firm, as quoted by Seeking Alpha. “Despite a premium valuation, we see the stock outperforming the broader market from current levels.”
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